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Mexico's Wireless Subscribers Reach 71 Million at End-March

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MEXICO CITY (Dow Jones) Mexico's wireless subscribers rose to 71 million at the end of March, up from about 59.4 million in the year earlier period, according to data from the country's four mobile operators.

Market leader Telcel, a unit of Latin America's largest mobile phone company America Movil, said in its first-quarter earnings report that its subscriber base grew 14.7% on the year to 51.5 million.

Telcel's market share fell to 72.5%, from 75.7% at the end of March 2007 amid competition from the local unit of Spain's Telefonica.

America Movil is controlled by Mexican billionaire Carlos Slim, who also owns Mexico's largest fixed-line phone company, Telefonos de Mexico.

Telefonica Moviles Mexico, which operates under the Movistar brand, increased its number of clients 42.3% to nearly 13.3 million at the end of the quarter, which boosted its market share by three percentage points to 18.7%.

The No.3 operator, Grupo Iusacell, which is owned by Mexican media and retail tycoon Ricardo Salinas Pliego, saw its subscribers grow 16.2% to just under 4 million.

Iusacell has tried to differentiate itself from its larger rivals in recent years by offering third generation, or 3G, mobile telephony services such as wireless broadband and streaming video.

Telcel has responded by launching its own 3G services, and at the end of the first quarter it had 3G networks operating in 16 cities with plans to expand its coverage throughout the year.

The country's smallest operator, Nextel Mexico, a unit of wireless carrier NII Holdings, had about 2.3 million clients at the end of March, up from 1.7 million a year earlier.

Nextel is a niche player offering push-to-talk services that allow multiple users to communicate with each other at the same time.

Analysts say Mexico's wireless industry still has plenty of room to grow, with penetration at about 68% compared to other Latin American countries such as Argentina and Chile, where penetration levels are over 85%.

Mexico's federal telecommunications regulator Cofetel plans to auction radio spectrum in the 1900MHz and the 1.7GHz-2.1GHz bands later this year with the hope of attracting at least one new mobile operator to boost competition in the sector.

Existing operators, however, have found it tough going against Telcel, whose size, financial strength and business acumen have allowed it to maintain its hefty lead over rivals.

Mexico's antitrust agency, the Federal Competition Commission, or CFC, has launched two separate investigations into the mobile telephony industry in the last six months after Telefonica accused Telcel of anti-competitive practices.

The CFC, which expects to wrap up the probes by the middle of this year, has the power to levy fines against companies that abuse their market power to stifle competition.

The telecommunications regulator Cofetel can set the rates a company charges rivals to complete calls on its network if the CFC finds the company to be a dominant player in its market.

-By Ken Parks, Dow Jones Newswires; 52-55-5001-5723; ken.parks@dowjones.com

(END) Dow Jones Newswires

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Tags: telefonica  grupo iusacell  movistar  telcel  nextel  antitrust  cofetel  push-to-talk  auction  Mexico